Story by The Washington Post
Eight weeks ago, it appeared that the days of 30-year fixed rate mortgages at less than 4 percent were a thing of the past. But recent economic uncertainty has sent those rates tumbling, which is good news for those looking to purchase a home or refinance a loan.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average hovered below 4 percent for the second week in a row, falling to 3.91 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.98 percent a week ago and 4.14 percent a year ago.
The 15-year fixed-rate average slipped to 3.13 percent with an average 0.6 point. It was 3.17 percent a week ago and 3.27 percent a year ago.
Hybrid adjustable rate mortgages were mixed. The five-year ARM average held steady at 2.95 percent with an average 0.4 point, same as it was a week ago. It was 3.27 percent a year ago.
The one-year ARM average rose to 2.54 percent with an average 0.3 point. It was 2.52 percent a week ago.
“All eyes are on the upcoming July employment report, as the Fed has made it clear developments in the labor market will affect the timing of any potential rate hike,” Sean Becketti, Freddie Mac chief economist, said in a statement.
“But early signals indicate Friday’s employment report will not look so good. The employment cost index rose 0.2 percent in the second quarter, the lowest quarterly increase in its 33-year history and ADP’s Private Employment Report missed expectations for private jobs in July. Uncertainty about the economy helped drive down Treasury yields early in the week, and thus mortgage rates fell 7 basis points to 3.91 percent, the lowest level since June 4th.”
Meanwhile, last week’s dip in rates caused a jump in mortgage applications, according to the latest data from the Mortgage Bankers Association.
The market composite index — a measure of total loan application volume – increased 4.7 percent from the previous week. The refinance index climbed 6 percent, while the purchase index rose 3 percent.
The refinance share of mortgage activity accounted for 51.3 percent of all applications.
“Despite recent concerns about the economy, both purchase and refinance applications increased strongly in response to lower interest rates last week,” Lynn Fisher, MBA’s vice president of research and economics, said in a statement. “Refinance activity was the highest since May when rates were last at this level. The increase in purchase activity was also notable for this time of year, up 23 percent relative to a year ago.”